The Holloway Consulting Group, LLC
The Holloway Consulting Group, LLC is an expert in the Measured Mile Method (MMM) of calculating construction productivity claims. We have found that construction attorneys on both sides of the table often struggle with the key elements. This is also true for triers of fact. As a result, erroneous rulings and judgements are often made.
Dwight Zink published the first known article on this method of analyzing construction productivity claims in 1986. However, the underlying methodology was in wide use in the construction industry long before this article was published. For example, Steve Holloway employed this methodology in 1976 working as a Project Engineer for M.W. Kellogg.
Contractors must convince the owner or fact finder that the damages sought are reasonable. However, contract damages, particularly loss of construction productivity damages, can be difficult to demonstrate convincingly. This is true even where they have been monitored and measured contemporaneously. Alternative methods may be applied where actual construction productivity damages were not measured contemporaneously.
THE MEASURED MILE METHOD
Construction efficiency is expressed as Input/Output (I/O). This means, for example, that when a craftsman inputs an hour of work, she should generate some output. The MMM is based on the craftsman’s actual Direct Labor Manhours per unit of output or work completed. Common units of construction work planned and completed include inches, feet, yards, volume, tons, cubic feet or yards, square feet, lineal feet, each, etc.
Contractor construction damages claims often seek to recover some or all of actual costs incurred above estimated costs. Conversely, the MMM disregards the contractor’s estimated costs. Instead, the focus is on comparing labor efficiency during the “unimpacted” period to efficiency during a subsequent “impacted” period.
The contractor may have a valid claim if direct labor efficiency decreased for compensable reasons during the impacted period. The contractor’s actual productivity might be better than or worse than that budgeted during the unimpacted period.
Project Goals
Whether managing projects via cost/ schedule control systems criteria (C/SCSC) or resolving disputes with the “Measured Mile” method or other such techniques, the primary goals are to:
- Determine why actual labor performance has varied (+/-) from estimated and budgeted performance; and,
- Quantify compensable and non-compensable damages.
This article examines some of the strengths and weaknesses of this technique as revealed over the past 30 years in settlement, mediation, arbitration, and trial.
WHAT TO MEASURE AND QUANTIFY
Subscribers to our newsletter are reminded that the core fundamentals of the Measured Mile method originate from the C/SCSC first developed by various U.S. government defense agencies in the 1950’s and 1960’s, and later adapted to EPC projects by large U.S. contractors such as Fluor, Bechtel, etc. (The author was a construction field engineer dealing with real labor productivity issues during these ancient renaissance days). Earned Value systems and construction cost engineering rely on performance measurement concepts which share many similarities with the “Measured Mile” methodology such as the:
>Budgeted Cost of Work Scheduled (BCWS);
>Budgeted Cost of Work Performed (BCWP); and
>Actual Cost of Work Performed (ACWP).
As is the case in field cost accounting and engineering, the goal in the Measured Mile Method is, or at least should be, to analyze direct labor performance at the lowest level (cost account or sub-account) possible. The reason for this is obvious: the lowest levels of data reporting should produce the highest levels of clarity. For example, high level reporting of total steel erection manhours/ton erected might be appropriate for executive management, but, if possible, project managers will endeavor to measure performance at the steel sub-accounts; unload, erect, bolt-up, weld, decking, stairs, handrails, etc.
The Measured Mile Method cannot be applied to variances in costs and/or productivity at the project level.